Correlation Between Universal Stainless and BSANCI

Can any of the company-specific risk be diversified away by investing in both Universal Stainless and BSANCI at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Universal Stainless and BSANCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Universal Stainless Alloy and BSANCI 3177 26 OCT 31, you can compare the effects of market volatilities on Universal Stainless and BSANCI and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Universal Stainless with a short position of BSANCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Stainless and BSANCI.

Diversification Opportunities for Universal Stainless and BSANCI

0.27

Correlation Coefficient

Universal Stainless  BSANCI

Modest diversification

The 3 months correlation between Universal and BSANCI is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Universal Stainless Alloy and BSANCI 3177 26 OCT 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSANCI 3177 26 and Universal Stainless is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Universal Stainless Alloy are associated (or correlated) with BSANCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSANCI 3177 26 has no effect on the direction of Universal Stainless i.e., Universal Stainless and BSANCI go up and down completely randomly.

Pair Corralation between Universal Stainless and BSANCI

Given the investment horizon of 90 days Universal Stainless Alloy is expected to generate 0.25 times more return on investment than BSANCI. However, Universal Stainless Alloy is 4.03 times less risky than BSANCI. It trades about -0.09 of its potential returns per unit of risk. BSANCI 3177 26 OCT 31 is currently generating about -0.83 per unit of risk. If you would invest  4,422  in Universal Stainless Alloy on October 10, 2024 and sell it today you would lose (22.00) from holding Universal Stainless Alloy or give up 0.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	19.05%
Values	Daily Returns

Universal Stainless Alloy  vs.  BSANCI 3177 26 OCT 31

Universal Stainless Alloy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Stainless Alloy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Universal Stainless may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BSANCI 3177 26

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BSANCI 3177 26 OCT 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for BSANCI 3177 26 OCT 31 investors.

Pair Trading with Universal Stainless and BSANCI

The main advantage of trading using opposite Universal Stainless and BSANCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Stainless position performs unexpectedly, BSANCI can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BSANCI will offset losses from the drop in BSANCI's long position.

The idea behind Universal Stainless Alloy and BSANCI 3177 26 OCT 31 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.